DISCLAIMER: This post is an unsponsored collaboration between The Woke Salaryman and The Burrow by DBS. It is based on the average Singaporean’s – median salary of $4,437. All views opinions/views are their own and do not represent DBS’ viewpoint.
We’re big on saving money.
But blindly saving money with no idea what you’re going to use it for? Uh-uh. That’s a big no-no. As Woke Salaryman, we think clear saving goals are important, but not all of them are created equal.
What that means is that some of the stuff that the average Singaporean (median salary: $4,437) is saving for…well aren’t the wisest choices.
But we’ll be kind. To prevent the hurting of feelings in this article, we’ll start with the most sensible choices, then move up to the most unwoke options.
That way, you can exit the page when the honesty gets too much for you.
Sounds good?
Let’s begin.
Definitely: Homeownership
What you’ll need: Probably between $35,000 – $40,000 in your CPF OA account.
Renting a place might make financial sense elsewhere in the world.
But in Singapore, this isn’t the case.
There’s a reason why 91% of Singaporeans own their homes.
Yes, you can argue that most of us merely lease HDBs from the government for 99 years, but that’s still more affordable than renting. After all, if you split the entire cost of your 4-room BTO HDB flat (let’s say it’s $320,000) over 99 years, that equates to roughly $270 a month.
Trust me, you can’t rent a four-room flat for $270 a month.
When it comes to homeownership, we have little doubt that the average salaryman should purchase an HDB flat. Most people’s needs are met by a 3 or 4 room HDB flat – (median price $281,500 and $396,000 respectively, for resale flats). If you can’t afford resale, there is no way you can go wrong with BTO.
The key here is to not overextend yourself, and not think you are deserving of something out of your budget because ‘you worked hard’ – it’s silly to struggle for a five-room HDB ($480,000) or a condo ($700,000 and above) just because all your peers are doing so.
Our take: Make purchase decisions based on what you earn, not what you think you deserve.
Maybe: Children
What you’ll need: Really depends. We’d estimate between $280,000 to $700,000.
A lot of people don’t want to have kids these days, and we completely understand.
There are plenty of reasons not to have kids.
- You won’t have much time for yourself
- Your career will be affected
- You might not even have the chance to spend time with them because you’re busy trying to support them.
- Forget about early retirement
But hang on, there are also lots of reasons to have children. Children bring purpose to some people’s lives. Raised correctly, they are companions, friends and provide fulfillment.
At the moment, we’re unsure whether or not to have children. Climate change and overpopulation are on the horizon. Our hypothetical child will have to compete with cheaper labour from all over the world, as well as more privileged kids.
Our take: We could raise the child purely to be economically competitive. That means expensive tuition fees, a maid when we’re not at home, the best schools, etc etc.
But actually, I’d very much prefer to raise a child that is, above all, a good person with strong values. From my personal experience, that requires very involved parenting (I was a latch-key child who grew up with little supervision).
That might mean taking time off for a few years to be present during the child’s formative years to inculcate the right mindset and perspective. For that to happen though, means…getting some financial security early on in life for that to happen.
Of course, that financial security will depend on your savings goals.
Hence this post.
Hard: A Gap Year
What you’ll need: $70,000 (ya, I know it’s huge – more on this later)
A gap year/sabbatical is very much in fashion these days. Most of the people we know spend it travelling, and we see the appeal.
Seeing more of the world is something Singaporeans definitely need to do. It’d help cure what many of us lack: Perspective.
Contrary to popular belief, a trip like this won’t be super expensive. The key is how you want to spend your holiday. If you wanna mindlessly going to tourist spots around the world for the gram, prepare to fork out a whole ton of airfares.
But… I would rather take time to explore one/a few countries a little deeper and understand cultures different from your own – my version of this trip is saving $18,000, flying to Europe and then slowly make my way back to Singapore on a bicycle.
Our take: We can go on and on about how to travel affordably, but no matter how much you save, the main cost of a gap year isn’t the travel fees. It’s the opportunity cost.
Taking time off for a year will cost you at least $52,800 lost in potential income.
Now, take $18,000 and add it to $52,800. That’s close over $70,000. That’s a lot of money that could be potentially used to build your future and a missing year in career progression.
We’re not saying gap years are bad, we’re saying that it is important for you to understand what you’ll be giving up.
For that reason, we’d recommend you have substantial savings before embarking on a gap year. So that you have a safety cushion to return to, should the economy not look chirpy.
Can we afford a gap year at this point? Not yet. But we’ll get there.
Immensely Hard: Financial Freedom
What you’ll need: At least $500,000
Side hustling is great and all, but it’s ultimately unsustainable in the long term. I’ve been side hustling intensively for five years, and while the extra income is great, it means taking time away from other things: relationships, hobbies, fitness, etc.
The whole point of saving lots of money is to use it, no? Some people buy cars, others buy luxury bags. My intention will be to use money to buy time.
With $500,000 saved up, I’d estimate being able to generate at least 4% of passive income from it every year – about $20,000 a year or $1,666 a month.
That’s not a large amount, but it’s not small either.
It’ll allow me to be more selective of my jobs if I were a freelancer, take on a less stressful role (high salaries = high stress), or even take a break from working for a couple of months if I wanted to (especially if I spend it in more affordable countries).
But more importantly, it’ll also let me dedicate more time to The Woke Salaryman (assuming we’re still around in 2024).
Bottom line: Of all the goals listed here, this is the one I most strongly believe in.
Being financially free opens up a huge number of possibilities. Raising children, looking after your elderly parents, travelling the world, pursuing your passion are suddenly no longer dreams.
You Probably Shouldn’t: A Car
What you’ll need = between $20,000 to $100,000, depending on how long you own your car.
If you own a car, you’re probably one of two things – really well to do (congrats!), or really financially unwoke.
Here’s a simple way to tell: if you are fussing over ERP charges ($5/$3) and parking and road tax and COE, you’re probably the latter.
For most salarymen who sit on their butt in the office all day, a car is one of the silliest things you can buy.
- Grab and GoJek provide the same level of comfort as having a car – minus the expensive maintenance costs, the endless driving to find parking, the fines, etc etc.
- Public transport in Singapore is actually ok and (relatively) affordable.
- If you want to combine exercise and transport you can cycle to work.
Our take: Why would we buy a car? Here are some scenarios that make the most sense.
- You work a sales job and need to drive around Singapore
- But… if the sales job doesn’t pay you enough to afford the car, maybe you should quit your sales job?
- But… if the sales job doesn’t pay you enough to afford the car, maybe you should quit your sales job?
- You have children/old parents who can’t get around by themselves
- Tough one, but still I’d buy a cheap used car with 3-4 years left. The longer you own a car, the poorer you become.
- Tough one, but still I’d buy a cheap used car with 3-4 years left. The longer you own a car, the poorer you become.
- You love cars and your whole identity hinges on owning one of these overpriced, pollutive machines that turn people into monsters when they go behind the steering wheel
- Ok
- Time to change your profile picture to a car
You Definitely Shouldn’t: An Expensive Wedding
Where do we begin? Spending a lot of money for just one day of your life is something we can’t agree with. We believe in thinking for the long term and playing the long game.
Spending 40k, 50k or even 100k for your wedding? You must be crazy.
If you have to placate your face-loving parents, spouse (value misalignment!) and in-laws, the max we’ll go is $30,000.
The minimum would be $42 for a ROM.
But maybe that’s a little unromantic. How’s this though? I attended a wedding recently with just 15 guests. They booked out P.S Cafe in the Ann Siang Hill for the morning and held the ceremony there.
Think it cost them less than $5,000? Now, that’s woke.
Our take: Save on the wedding. Spend on the marriage.
Conclusion:
Do you really need a conclusion?
Stay Woke, Salarymen.
This article first appeared on The Woke Salaryman and is part of a content syndication agreement between The Woke Salaryman and Seedly.
For this series of comics that are related to all things personal finance, the Seedly team worked closely with The Woke Salaryman to bring you useful sh*t which you can apply to your everyday life.
The Woke Salaryman is the brainchild of a Singapore-based duo that aims to help people reach financial independence early. It is the quintessential page for people living in Singapore who earn the median salary and didn’t inherit their fortunes from their parents.
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